Cement, Hydraulic
SIC 3241
NAICS 327310
The global cement industry manufactures various types of hydraulic cement, including portland, the most common form, as well as natural, masonry, and pozzolana cements.
Cement's highly cyclical demand is dependent on the world's construction markets. Where there are many new projects, the cement industry thrives. The regional economic recoveries, and in some places, the economic booms of the early and mid-1990s stimulated worldwide production growth spurts as high as 6.35 percent. By 2003, yearly world production stood at nearly 1.9 billion metric tons, up from almost 1.8 billion metric tons in 2002 and approximately 1.5 billion metric tons during the late 1990s.
Fueling much of this growth was the briskly expanding Asian economies led by China, by far the world's largest cement producer and consumer. In the mid-1990s, the region found itself short of cement supply, and numerous firms within the region and around the world moved quickly to meet the excess demand. Growth was restrained by the 1997 financial crisis, however, as numerous companies, governments in the region scaled back construction projects, and as Asian cement manufacturers grappled with debt and cash flow problems. Heading into the mid-2000s, China's economy was booming. By 2004, the nation was responsible for 43 percent of cement consumption worldwide, a number that was expected to reach 52 percent by 2020.
While the industry includes a number of sizable multinational companies, most cement production still occurs relatively close to its intended consumers because the logistics of handling cement over long distances are cost prohibitive for many manufacturers. Nonetheless, innovative firms such as Cemex have helped stimulate a thriving regional trade, particularly in Asia and Central and South America.
Cement makers grind controlled mixtures of minerals, most often limestone and clay, in either a wet or dry environment to produce a powder. The powder is then heated in a kiln until it chemically changes into clinker pellets, which in turn are reground into a fine powder with additional minerals such as gypsum. This finished powder, the actual cement, may be mixed with water and sand or gravel, known as aggregate, to produce concrete. Various nations and trade associations prescribe minimum standards for cement composition and strength. Two widely recognized international standards for the industry are the American Society for Testing and Materials C150 specification and the British Standard Institution 12 specification; both specifications are revised periodically.
Portland cement, named after the British island of Portland and attributed to Englishman Joseph Aspdin, who obtained a patent for it in 1824, comprises by far the largest segment of the hydraulic cement market. It is the key ingredient in the concrete used in the construction of highways, dams, airports, sewage facilities, power plants, office buildings, and other structures. Although some concrete structures have stood a century or more, those made from portland cement paste are vulnerable to acids, sulfates, and some other salts. Portland cement is usually made from limestone or chalk and from clay or shale. Tetracalcium aluminoferrite contributes to its characteristic gray color. If a white cement is desired, use of tetracalcium aluminoferrite is kept down to about 1 percent.
Concrete can be mixed near the construction site or mixed at a central plant and transported by special agitator trucks, provided the operation can be completed within about 90 minutes. Transported concrete is known as ready-mixed.
While a number of international companies staked out greater control of some market segments entering the mid-1990s, the cement industry remained largely decentralized and competitive. Markets historically tended to be localized because of high transportation costs and the need for on-time delivery to construction sites. Because it is heavy and moisture-sensitive, cement requires special handling in transit as well. Thus, cement companies often own their own principal raw material quarries and locate their manufacturing plants at those sites to minimize material handling. Since clay and limestone are relatively abundant in many regions of the world, local production is usually feasible.
Cement production is a capital-intensive enterprise. The process requires continuous operations and utilizes a heating process that takes 4.4 million British thermal units (Btu) of heat to make one ton of cement. Facility shutdowns can be very expensive. Clinker and cement can be stored, but inventory maintenance can also be expensive. Moreover, cement production is a volume-sensitive industry in which any drop in sales has a disproportionately severe effect on profits. Because cement producers sell their product primarily to the construction industry, they are frequently buffeted by unpredictable, seasonal, and cyclical economic conditions felt by contractors.
The United States is among the world's largest cement manufacturers. However, it ranks far below developing nations. Citing data from OneStone Consulting Group, World Cement's World Review 2004 revealed that the North American region ranked fourth in cement production during 2003, at 105 million tons. By comparison, China produced 765 million tons, followed by Western Europe (including Turkey) with 236 million tons, and the Far East/Oceania region (excluding China, India, and Japan) with 215 million tons. In all, world production totaled nearly 1.9 billion tons in 2003.
On the consumption side, World Review 2004 estimated that that developing countries consumed nearly 75 percent of cement in 2003, based on estimates from J.P. Morgan. Of the total cement produced worldwide that year, China accounted for 973.8 million tons, followed by Western Europe (226.2 million tons), North America (115.2 million tons), and Latin America (92.7 million tons).
While U.S. cement exports are negligible (totaling US$58.8 million in 2002), the United States is a sizable importer, with a total of US$940 million in 2002. Leading sources of U.S. imports include Canada, Spain, Mexico, and Venezuela. In general, most U.S. imports come from foreign facilities of companies also operating in the United States.
China constitutes the world's largest cement maker, producing about 41 percent of world...
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